Sharp widens full-year loss forecast, cuts 5,000 jobs

AFP and Bloomberg, TOKYO

Sharp Corp, the television maker that has shed 60 percent of its market value this year, widened its full-year loss forecast and announced job cuts as demand for liquid-crystal displays weakened more than expected.

The company said it would remain in the red for the rest of the year amid losses at its struggling TV business.

Net loss for the April-to-June quarter was ￥138.4 billion (US$1.76 billion), compared with a loss of ￥49.3 billion in the same period a year ago. Operating loss was ￥94.1 billion, plunging from an operating profit of ￥3.5 billion a year ago. Sales fell 28.4 percent to ￥458.6 billion.

The Osaka-based company will eliminate 5,000 jobs worldwide in its first job cuts since 1950 as global demand and prices tumble, and a yen near its postwar high against the US dollar erodes overseas earnings.

“About 5,000 jobs will be eliminated by March 2013 through natural attrition ... and voluntary retirement,” Sharp said in a statement.

Kyodo News said earlier yesterday that Sharp had originally considered cutting about 3,000 domestic jobs, but decided to expand the scope to include worldwide operations to accelerate a management restructuring.

The company, which has seen its mainstay television, LCD and solar panel products units struggle, said the job reductions were part of a bid to cut fixed costs by ￥100 billion to help its dented balance sheet.

Sharp also downgraded its annual earnings forecast, saying it now expected an annual net loss of ￥250 billion for the fiscal year through March next year, a huge increase from an earlier projection for a loss of ￥30 billion.

The company also raised its annual operating loss estimate to ￥100 billion, from an earlier ￥20 billion.

Annual sales are expected to be ￥2.5 trillion, down from an earlier projection for ￥2.7 trillion, it said.

The steps come after it unveiled a plan in June to separate its TV-panel unit and in March turned to Foxconn Technology Group (富士康科技集團) and the Taiwanese company’s founder Terry Gou (郭台銘) for ￥133 billion in funding after forecasting its second straight annual loss.

Foxconn’s flagship Hon Hai Precision Industry Co (鴻海精密), the assembler of Apple Inc iPads, is to start buying panels from Sharp’s display venture this quarter, three months earlier than planned under a March agreement, Sharp president Takashi Okuda said in June.